Question
IT'S DUE IN ONE HOUR HELP PLEASE! In the short-selling strategy, investors sell shares they have borrowed from a lender in the hope that the
IT'S DUE IN ONE HOUR HELP PLEASE!
In the short-selling strategy, investors sell shares they have borrowed from a lender in the hope that the price of those shares will fall. The goal is to make a profit by buying back the shares at a lower price before returning them to the lender. Suppose the U.S. Congress passes a bill that prohibits short selling of stocks, making it impossible for investors to make a profit when stock prices fall. However, the U.S. Congress places no restrictions on financial options. Using Call-Put, what advice could you give to investors who want to short certain stocks? In other words, propose a strategy describing how to accomplish the equivalence of a short sale using options and debt. Create a payoff table for your strategy to confirm/validate your answer.
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